Football Association of Ireland Discloses €84 Million in Liabilities and Debts After Departure of Former CEO John Delaney

In the latest reporting on the financially troubled Football Association of Ireland (FAI), on December 7 The Times reported a series of new developments, since former FAI Chief Executive John Delaney’s resignation in September, that indicated how dire the FAI’s situation has become:

On December 6, the FAI publicly presented its accounts for 2018 and reconstituted accounts for 2017 and 2016. Those accounts show that–

The FAI has total liabilities of more than €55 million and bank debts of more than €29 million. Moreover, those bank debts “are in ‘technical default’ due to errors in the 2017 accounts. The FAI said that it was attempting to refinance its debts, and the loans have been categorised under liabilities.”

The FAI had “seriously overstated its financial position in previous years.” In 2016, the FAI reported a profit of €2.3 million, but its actual profit was only €66,000. In 2017, the FAI reported a profit of €2.8 million, but it actually had a loss of €2.9 million. In 2018, the FAI had a loss of €8.9 million, “including a voluntary disclosure of underpaid employment taxes and VAT,” plus interest and penalties of €2.7 million for the period between 2015 and 2018.

At the time of his departure from the FAI, Delaney received a settlement of €462,000, including a €372,000 contribution to his pension fund and €90,000 in lieu of notice. Donal Conway, who also announced on December 6 that he is to step down as FAI President in January 2020, said “that he was not aware of the details of the payout to Mr Delaney as it did not come before the entire board.”

Conway, who had been on the FAI board for more than then years, also stated “that he had no idea the association’s finances were in such bad shape.” He admitted that “[t]he board I was a member of as a collective did not do its job well,” and stated, “I was part of a board that should have scrutinised more seriously than it did. I feel responsible for not having discharged that responsibility to a higher standard.”

Paul Cooke, who recently took over as the FAI’s executive lead and had been a longtime critic of Delaney’s conduct as CEO, said that “[w]hat we found in [the accounts] in addition to pension payments, loyalty bonuses, there were other payments that would have been paid on behalf of the former CEO, and items that should have been recognised as benefit in kind.”

In addition, Deloitte, the FAI’s auditors, stated that since the end of 2018, the FAI “has had negative operating cashing. The Association is reliant upon continued financial support from UEFA and the Association’s bankers.” It also stated that since the end of 2018, the FAI “has received ‘continuous financial support” from UEFA to help meet its “ongoing operations.” It reported that the FAI “was in ‘advanced discussions’ with its bankers to try to agree long-term funding to help it meet its liabilities and provide ‘financial stability to the balance sheet in the short and medium term’.” Although Deloitte noted that the FAI’s current directors “are optimistic that an agreement can be reached, however note that this presents a material uncertainty as regards the ability of the association to meet its liabilities as they fall due.”

N.B.: In light of these latest reports concerning the FAI’s financial woes, it is not surprising that the FAI’s plight has become a matter of national concern. The ripple effect of the FAI’s situation has caused great distress among local football clubs, even prompting Taoiseach Leo Varadkar to “pledg[e] to save grassroots football.”

These reports also indicate that the FAI has now become a case study in how the failure to conduct appropriate board oversight of senior leadership and finances, and to maintain effective internal controls, can have devastating consequences for an organization. Even with new executive leadership and new independent directors, the FAI faces a long and hard road in restoring its financial affairs and public confidence in its stewardship.

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Published by Jonathan J. Rusch

I'm a lawyer and consultant interested in corporate- and individual-compliance issues, and an inveterate part-time law professor; a former federal prosecutor, regulator, and anti-bribery and corruption compliance head at a global financial institution; and a (very minor) shareholder in Williams Grand Prix Engineering.
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